Amazon, Mobile Payments and the Power of One-Click

Apple has had a unique role by owning the entire ecosystem their customers use. It's a role that could give them significant influence in payments. But with the reported release of an Amazon smartphone imminent, they may not be so unique.

In my last post, I noted that Apple is in a "unique" position, one that conveys upon them a certain ability to affect the way their customers pay for things. They are, after all, the handset maker, the mobile OS provider and the owner of the ecommerce store through which all those apps end up on all those phones. They run their own brick and mortar stores as well. So their role in mobile payments could be much larger than their quarter share of the U.S. smartphone market would indicate. But that unique positions is not going to remain unique forever, and it could be eroded soon by another company that will likely have some interesting things to say about how people pay with their phones: Amazon.

Amazon is (reportedly) planning to release their own handset soon, making them a hardware provider, mobile OS provider (yes, it's a flavor of Google's Android mobile OS, but it's Amazon's version) and purveyor of digital goodies through their own (massive) ecommerce market. They also have an impressive number of active accounts, something north of 200 million and all connected to payment accounts. That would put them on the same level as Apple in terms of owning the entire ecosystem.

What makes Amazon an interesting entrant from a payment standpoint is they clearly understand the importance of payments to the consumer experience. Amazon is, after all, the folks who gave us one-click purchasing. My own monthly expenditures for Amazon's wares are anecdotal, but I can attest to the power of making payments easier. That power is why Amazon offered one-click payments to other online merchants through its Pay with Amazon feature. It's all about removing friction so that consumers never have to rethink their purchase decisions.

Along with that payment focus, Amazon has been quite successful getting their Kindle devices into the hands of customers with a philosophy that is quite different from Apple. Amazon doesn't sell expensive devices, instead focusing on the content that goes on those devices. Apple, on the other hand, is more interested in selling expensive devices that are then made useful through the content and apps they can access.

The philosophies on how to sell hardware and content may be different, but both companies have one thing in common: they both understand the importance of making payments easy supports their ecosystems. The big questions now are how far they can extend those ecosystems, and how payments will play a role.

About the author

James Wester

James Wester is Research Director for IDC Financial Insights responsible for the global payments practice. Mr. Wester’s core research coverage includes the evolution of payment networks and…